Charities Commission legislation passed
14 April 2005
Charities Commission legislation passed
Associate Commerce Minister Judith Tizard and Community and Voluntary Sector Minister Rick Barker today welcomed the passage of the Charities Act.
The concept of a Charities Commission was first discussed as far back as 1989. Over recent years, the charitable sector has asked the government to increase the level of support provided to the sector.
“This legislation is a symbol of this government’s commitment to growing the relationship between government and the charitable sector,” said Judith Tizard.
Rick Barker, the Minister responsible for the Commission from 1 July, says the Charities legislation establishes a Charities Commission to provide a registration, reporting and monitoring system for charities and support and education for the sector.
“Being a registered charity will mean an organisation can assure the donating public they are carrying out legitimate charitable purposes and the public will be able to check that through the online registration system,” Rick Barker said.
The Ministers thanked the many people who made submissions and those who participated in consultation on the workability of changes the select committee made to the Bill. Judith Tizard also thanked Gordon Copeland and United Future for their support in developing this legislation.
“The charitable sector had some significant concerns about the Bill as it was first drafted. We, and the Social Services Select Committee, have worked hard to address those concerns,” said the Ministers. “We now have a piece of legislation that meets the needs of the sector, the government and the wider community."
Changes made as a result included the Commission being an autonomous Crown entity, an increased emphasis on the Commission’s education and support function, and a commitment from the government to fund the set up of the Commission and the initial costs of registration for charities.
"Having a Charities Commission is a further initiative that acknowledges the vital contribution this sector makes to New Zealand communities and the wellbeing of all New Zealanders," the Ministers said.
The legislation brings the Commission into being on 1 July 2005 and it is anticipated charities will be able to register from 2006.
Further information: www.charities.govt.nz
Question and Answers: Charities Act
What does the Charities Act do?
The Act establishes a Charities Commission as an autonomous Crown entity.
What will the Charities Commission do? What are its role and functions?
The Commission will have two main functions. One is to provide an education and support role to the charitable sector. The other will be to register and monitor charitable entities that wish to keep or obtain income tax exempt status.
The Commission will also:
- promote public trust in charitable organisations;
- encourage best practice in governance and use of resources of charitable organisations;
- provide advice on matters relating to charities to the government; and
- Promote or undertake research into matters relating to charities.
When will the Commission come into being?
The Charities Act establishes the Charities Commission from 1 July 2005. The register of charities will not come into existence until 2006 and the taxation provisions will not apply until 2007.
Who will the Commissioners be and how are they being appointed?
There are 378 applicants for Commission board membership.
Five to seven people will be appointed by the Hon Rick Barker, Minister for the Voluntary and Community Sector, in consultation with his Ministerial colleagues. The Minister will receive advice from an interview panel comprising Dame Catherine Tizard, Dame Margaret Bazley, Tony Dale and a senior official from the Department of Internal Affairs.
It is expected appointments will be made in June.
Does my organisation have to register?
Registration is not mandatory. However, charitable organisations wanting to retain or gain tax exempt status will need to register by a future date yet to be set (this date is likely to be decided in 2006).
The Act includes offence provisions for organisations that falsely state that they are registered. Therefore, any charity wishing to use the term “registered charitable entity” or any other term implying registration will need to register.
What advantages will there be from being registered? How will members of the public be able to identify a registered charity?
The main advantages are eligibility for the exemption on income tax and the positive “branding” associated with registration.
There is no requirement to display the organisation’s registration number on all materials but organisations can use the number in that way if they want to.
Internet and telephone collectors will be required to provide the registration number on request.
If my organisation wants to register, when does it need to do this by?
Charitable organisations will not be required to register this year.
The register will not be up and running until March 2006 at the earliest and there will be a reasonable transition period after that before registration will be necessary to retain or obtain an exemption from income tax.
How will the registration process work?
Both online and paper registration will be possible.
What about my organisation’s tax exemption – do we lose this?
If your organisation does not register with the Commission by a future date, which will be determined in 2006 or 2007, it will no longer have tax exempt status.
How much will it cost to register an organisation?
Initial registration will be free of charge.
What about ongoing costs?
Following registration, registered entities will need to file an annual return.
Annual return fees will be set at $50 (GST incl) for online filing and $75 (GST incl) for paper based annual returns but charities with an annual income of $10,000 or less (GST excl) will be exempt from the fee.
What information will I be required to supply?
This will be set out in regulations made under the Act.
Will there be consultation on the regulations made under the Act?
Yes, there will be consultation on the forms proposed under regulation. That process will commence later this year.
Who will be able to access the information supplied for registration?
Information on the register will be publicly available. However, there may be circumstances where certain information provided for registration or that would otherwise appear on the register may be withheld for privacy or other reasons.
How will the sector know when to register and what to do?
The Charities Commission will provide information and will communicate extensively with the sector in the lead up to the registration system coming into force.
How will the Commission be funded?
The Crown will fully fund the Commission’s operational costs for 2004/05 and 2005/06 and will part-fund the Commission in 2006/07.
The Crown will fund all the initial development and running costs of the register. The Commission’s funding requirements will be reviewed for 2007/08 and out years.
Which government department will be responsible for monitoring the Commission?
The Department of Internal Affairs will be responsible for monitoring the Charities Commission. Formal responsibility for the legislation will transfer from the Ministry of Economic Development to the Department on 1 July 2005. MED and DIA are already working closely together, along with other key agencies like the Inland Revenue Department and the Office of the Community and Voluntary Sector.
For more information: www.charities.govt.nz